Possible fraud dogs Unilife

The medical device maker plumetted today despite management securing an important contract, with management issues and possible fraud dogging the stock.

The Unilife Corporation (UNS) rollercoaster ride took another unexpected plunge today even as management secured an important contract with pharmaceutical giant Sanofi.

Shareholders should have been rewarded by the highly anticipated news that could generate more than $100 million in annual revenue for Unilife.

But corporate governance issues are dogging the stock, which crashed 7.8% in lunch time trade to 59 cents.

Unilife’s woes began when a recent article by Forbes highlighted credibility issues with management. Investors are further spooked by news that the company could be facing a class action lawsuit against its directors for allegedly breaching US Securities Exchange Act.

Separately a former ex-employee, Talbot Smith, has filed a whistle-blower lawsuit against Unilife for possible fraud and violations of the US federal securities act.

The allegations have overshadowed Unilife’s contract, which will see Sanofi purchase 150 million of its retractable syringes that will be pre-filled with Sanofi’s anti-coagulation drug.

Unilife will receive milestone payments of between $5 million and $15 million, on top of a royalty for every syringe sold. Some analysts estimate that the royalty payment could be worth as much as $100 million a year.

Unilife, which is listed in Australia and the US, is part of the Uncapped 100.

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